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Emerge ing

  1. 1. Financial Wellness Landscape Analysis: An Overview of the Need for Workplace-Based Financial Wellness Programs EMPLOYEE BENEFITS
  2. 2. Table of Contents Executive Summary ..................................................................... 3 The Financial Wellness Landscape............................................... 4 American workers living paycheck to paycheck ........................................4 Financial literacy and money management ...............................................5 Payday loans and their effect on workforce productivity...........................5 Credit card debt ........................................................................................6 Savings capacity........................................................................................6 Retirement savings....................................................................................6 Financial Distress: The Impact on Employers and the Workforce ...................................................................... 7 Financial stress and health ........................................................................7 Financial stress as a workplace distraction................................................8 Employee turnover effects.........................................................................8 A Financial stress and 401(k) participation and loan usage ......................8 Employer Strategies for Improving Financial Wellness............... 9 What is financial wellness? .......................................................................9 What are the components of workplace-based financial wellness programs? ..................................................................10 How Employers Benefit from Offering Financial Wellness Programs .....................................................................14 How Employees Benefit from Financial Wellness Programs .....................................................................16 Potential Obstacles for Employers .............................................17 Conclusion ..................................................................................18 End Notes ...................................................................................19
  3. 3. Ex ec uti v e Sum m ar y | 3 Executive Summary Employers have long sought to both maximize productivity and maintain a strong and productive workforce. Employers are increasingly looking to benefits packages as a means to leverage a more productive workforce, with employee wellbeing emerging as a priority. Financial wellness programs – which may include a variety of innovative products, professional services, and financial education tools – can help employers improve their bottom lines by: 4 4 reducing absenteeism and sick-time usage 4 increasing retention and employee loyalty 4 reducing financialrelated stress among employees minimizing 401(k) loan usage 4 Improving productivity through reduction in ‘presenteeism’ Financial wellness programs succeed by offering a range of options that employers can choose from to meet the specific needs of their respective workforce. These programs offer tremendous potential for an employer to improve the financial wellbeing of its employees while benefitting from a substantial return on investment.
  4. 4. 4 | The F i n a n c i a l Wel l n ess La n d scap e The Financial Wellness Landscape Americans need ways to help them increase their financial stability and security. This challenge is not limited to the lower thresholds of income. Workers at all income levels struggle in their abilities to manage money, make investment decisions, improve their credit, and build assets. American workers living paycheck to paycheck Americans are struggling to save across income levels. A recent survey found that approximately two-thirds of American workers were living paycheck to paycheck in 2012.2 Additionally, according to a 2013 study, approximately 43.9% of American households are liquid asset poor – they do not have the savings to be able to sustain their most basic expenses for a period of three months in the case of a loss of income.3 Families who are liquid asset poor lack the necessary resources to weather a financial emergency or manage unexpected expenses such as illness or car repairs. As a result, consumers may accumulate credit card debt, or turn to high-cost and often predatory financial services such as payday loans. – 35% 31% 33% $$$ 29% – 30% – 25% 23% Did You Know? Less than half of low and moderate income families have emergency savings of at least $500.1 33% – 20% Percentage of employees who have already used money in retirement plans for expenses other than retirement – shown by age – 15% – 10% – 5% – 0% 21-34 years 35-44 years 45-54 years 55-64 years 65+ years Source: PWC Employee Financial Wellness Survey 2012 Results
  5. 5. The F i nanc i al Wel l nes s L ands c ape | 5 Financial literacy and money management Americans also lack confidence in their ability to manage personal finances overall. The 2012 Consumer Financial Literacy Survey found that 80% of Americans believe that they could benefit from information and advice from a professional about everyday financial questions.4 More than half of Americans do not have a regular budget, including 22% of consumers who report that they do not have a good idea of how they are spending their money.5 Poor money management knowledge and habits also impact consumers’ long-term stability. Those with lower levels of financial literacy are less likely to save for retirement, or to be able to make informed decisions about long-term investments.6 Payday loans and their effect on workforce productivity Payday loans, which can send participant consumers spiraling into financial distress, are used by 12 million Americans each year, at all income levels, but primarily by those in lower income brackets.7 The median annual income of a payday loan borrower has been estimated to be as low as $20,000 and as high as $50,000.8 Payday loan users are often indebted for more than half of each year in which they borrow, with an average of nine transactions at annual interest rates surpassing 400%.9 In addition, payday lending has been shown to contribute to the loss of bank accounts, increased bankruptcy filings, financial hardship, and credit card delinquency.10 Ultimately, payday loans have the potential to create and contribute to financial crises among the consumers who use them. Despite these jarring statistics, the strength of the industry indicates that there is a need in the marketplace for short-term loans that meet consumers’ need for products that are easy and quick to access.11 According to the FDIC 2011 National Survey of Unbanked and Underbanked Households, consumers, even those who are banked, use payday and pawn shop loans because it is easy to become approved for this type of credit. About twenty percent of households surveyed also reported using these types of credit because they did not perceive that small-dollar personal credit was offered by their bank or credit union.12 States across the nation are adopting stronger policies to curb predatory lending. Currently, 19 states have capped the maximum APR on short-term consumer loans at 36% or lower.13 However, many states are still without consumer protections, while states that do have regulations have seen a rise in online businesses offering similar products. In response, many banks, credit unions, nonprofit organizations and socially responsible businesses across the country have been working towards creating better and more affordable alternatives to payday lending to meet consumer demand.
  6. 6. 6 | The F i n a n c i a l Wel l n ess La n d scap e Credit card debt The average credit card balance among households that carry credit card debt is $7,100.14 High debt loads and an inability to repay are contributing to declining credit ratings; in fact, 56% of American consumers have subprime credit.15 Debt has been shown to have implications on consumers’ mental health including lower self-esteem, lower productivity and higher levels of stress.16 In addition to the impact that debt has on consumers’ mental health, low credit ratings are preventing households from building assets and saving for retirement. Savings capacity With difficulty managing cash flow – and with high debt loads – Americans are struggling to save. The realities of liquid asset poverty are preventing workers from maintaining a safety net for financial emergencies and unexpected expenses or to work towards general savings goals such as for vacations or holidays. Without the ability to save for short-term purposes, Americans are also having trouble building assets by investing in long-term savings goals such as college education or home ownership. The median net worth in America was $68,948 in 2010, a decline of $27,000 since 2006.17 Not only are Americans not saving, but they are not confident in making decisions about how to save their money. About half of American working adults, women more so than men, report feeling uncomfortable about selecting investments.18 Here again, workers at all income levels struggle with their decisions. Retirement savings American workers’ confidence in their ability to retire is at a historical low, with only 58% reporting that they currently save for this purpose.19 A survey of household savings and investment activity (excluding their primary home and defined benefit plans) reveals that 60% of workers report total investments of $25,000 or less, and of those, 30% state they have saved less than $1,000.20 Lack of access to institutional savings mechanisms may be one of the biggest barriers to saving. Empirical evidence suggests that, with the right financial products and services, even low-income households can save and accumulate assets.21
  7. 7. F i nanc i al D i s tres s : The I mpac t on Empl oy ers and the Wor kf orce | 7 Financial Distress: The Impact on Employers and the Workforce Financial stress and health There is a strong correlation between a person’s financial and physical health. Financial stress is significant in the majority of people’s lives: 75% of those surveyed named money as their number one source of stress.22 In addition, 1 in 4 American workers are seriously financially distressed,23 constituting more than 30 million workers who may be absent from or distracted at work as a result.24 In addition to the direct health consequences of high stress levels, stress can also lead to unhealthy coping behaviors, such as tobacco and alcohol use, and decreased physical activity that can result in further health problems.25 High levels of stress related health problems tend to correlate with socio-economic status; in low-income communities, where people face chronic stressors related to poverty, stress-related health problems and unhealthy coping behavior tend to be high.26, 27 The result? Employees’ rates of sick day usage and absenteeism reflect the cost of addressing stressful financial situations or health-related issues. Employers absorb this impact through higher costs associated with health care, and managing through workers’ absence. They recognize these costs, too. In a recent survey of employers, 58% believe that “financial illness” plays a role in employee absenteeism.28 The High Cost of Low Wellbeing When it comes to reducing health care costs, employee wellbeing has a direct impact on a company’s bottom line. Employees who are thriving in overall wellbeing have 41% lower health-related costs compared with employees who are struggling and 62% lower costs compared with employees who are suffering. Annual Health-Related Cost to Employer (Disease Burden and Unhealthy Days) $11,709 Suffering $7,388 Struggling Thriving Source: GALLUP $4,395 Controlling for demographic differences at baseline The costs of financial distress extend beyond an employee’s bank account. Financial challenges and financial distress impact a worker’s health, workplace effectiveness, long-term financial stability, and ultimately, an employer’s bottom line. Quick Facts 1 in 4 American workers report that they are seriously financially distressed 4 in 5 American workers report some degree of financial stress Poor money management and insufficient emergency savings are the leading causes of financial stress
  8. 8. 8 | Fina n c i a l D i s t re s s: T h e I m p a ct o n E mp l o yers and the Workforc e Financial stress as a workplace distraction Financial stress and 401(k) participation and loan usage Employers not only lose money when employees are absent from the workplace; financially distressed workers are more likely to be distracted by money-related stress while on the job, either by attending to personal financial business, or discussing these issues with coworkers. Without the resources to address financial emergencies and manage high debt loads, financially distressed workers may reduce or discontinue 401(k) contributions, or take 401(k) loans, depleting retirement savings and disturbing the balance of an employer’s 401(k) portfolio. The vast majority of workers (97%) admit that they have thought about or managed their personal finances during work hours.29 For the most financially distressed employees, this activity can amount to up to 20 hours per month spent negotiating with creditors, paying bills, and discussing financial issues with coworkers.30, 31 In a recent survey of employers, 83% said that employee productivity was impacted by concerns about financial problems.32 Immediately following the recession, the percentage of 401(k) loan usage increased. 2009 and 2010 data shows that 21% of employees on an eligible plan had an outstanding loan balance, up from 18% in 2008.37 The average ratio of outstanding loan to 401(k) balances is 14%.38 These changes in 401(k) contributions and loan usage can affect the balance of contributions for highly and lower compensated employees that are required by nondiscrimination tests.39 Employees who take out 401(k) loans must then manage the burden of additional debt payments, while those who withdraw funds face high penalties and may compromise their long-term financial resiliency. Employee stress and distractedness due to personal financial issues can also be costly to an employer when it results in loss of workplace productivity, employee turnover, worker compensation, and other medical related costs.33 In fact, American companies lose more than 300 billion dollars a year due to stressed employees at work.34, 35 Employee turnover effects In addition, financially stressed employees may leave their jobs because their financial stress gets in the way of their ability to perform their job, or because they are changing jobs often, looking for short-term gains or income boosts in order to deal with financial issues. The cost of replacing an employee can range from1.5 and 2.5 times the annual salary of the incumbent worker, with training costs alone adding up to $1,200.36
  9. 9. Empl oy er Strategi es for I mprov i ng F i nanc i a l Wellness | 9 Employer Strategies for Improving Financial Wellness As research indicates, financial stress and instability can be costly to organizations and their employees. However, an organization’s efforts to increase its employees’ wellbeing can help to reverse some of those costs. A person with a high level of wellbeing is likely to have high productivity and as a result is far less costly to an employer.40 Whereas an employee with self-reported low wellbeing can cost an employer as much as $28,800 in lost productivity annually through sick day usage alone, employees who have high levels of wellbeing may cost an employer as little as $840 per year in lost productivity.41 In response to this information, more employers are turning to financial wellness programs that, like traditional physical wellness programs, place an emphasis not only on the treatment of stressors and difficulties, but also on prevention and behavior change. What is financial wellness? Just as financial stress impacts people at all income levels, financial wellness can be a characteristic found across the income spectrum.42 More than income generation alone, financial wellness or wellbeing encompasses a variety of factors affecting an individual’s financial health, such as financial capability levels and behavior, financial status and stressors, and personal characteristics. Some of the factors that determine an individual’s financial wellness may be fixed, while others such as financial capability levels and behavior offer opportunities for change, and ultimately improvement in an individual’s financial and overall wellbeing. Financial wellbeing involves deploying successful money management strategies to spend money wisely, and create financial security. This is critical to reduce day-to-day stress and anxiety and ensure a degree of both short- and long-term economic freedom to achieve a desired standard of living.43 Financial wellbeing is not isolated from other elements of one’s life – rather, it is interconnected to more holistic wellbeing, along with physical, social, career, and community satisfaction.44 What we found was that financial security – the perception that you have more than enough money to do what you want to do – has three times the impact of your income alone on overall wellbeing. Further, a lack of worry about money has more than double the impact of income on overall wellbeing. – Tom Rath and Jim Harter, authors of "Wellbeing: The Five Essential Elements"
  10. 10. 10 | Em p l o y e r S t r a t egi e s fo r I mp ro vi n g Fi n an ci al Wellnes s What are the components of workplace-based financial wellness programs? Today, employers can choose from newly emerging financial wellness programs to offer their employees a benefit that goes beyond financial education training and retirement packages. These programs are designed to address the complex factors that make up an individual's financial wellness, including short-term interventions to reduce the stresses of daily living as well as long-term planning to ensure financial security. In addition to offering comprehensive financial support, financial wellness programs must also be designed so that they are easily accessible by users, generate high levels of initial enrollment, and maximize ongoing levels of engagement. In general, employees are less interested in general financial education and more interested in participating in specific and relevant topics of interest to their situation – including debt management, retirement, and investment planning.45 Components of successful workplace-based financial wellness programs include: Customized/Personalized to address different employee’s financial concerns based on factors such as financial knowledge, financial situation, income, and debt-load. For example, a financial wellness program may offer access to Personal Financial Management tools (discussed further below) that provide customized advice and timely content derived from an analysis of an employee’s specific financial situation. This personalized approach to financial wellness seeks to increase interest and continued participation from employees as content and tools that are delivered are relevant to an individual’s personal financial situation. Self-directed so that an employee may engage with the program as much or as little as needed in ways relevant to his or her immediate financial concerns. Employer-provided financial wellness programs that offer self-directed approaches to financial learning have been shown to improve employees’ financial management behaviors, and increase financial and career satisfaction.46 Responsive to changing financial situations, including planned and unplanned financial events. A successful financial wellness program will take into account the diverse range of employee needs for services, and the fact that those needs will change over time. For example, a financial wellness program may offer shortterm loans for employees who encounter a financial emergency, and investment counseling when that same employee is ready to begin contributing to a retirement account. Comprehensive and responsive services will impact the ability of the program to affect an employee’s financial wellbeing holistically, while also contributing to long-term use of the program.
  11. 11. Empl oy er Strategi es for I mprov i ng F i nanc i al Wellnesss | 11 Easily accessible to maximize engagement and continued use by leveraging organizational infrastructure, innovative technology, and integrating with other wellness programs. For example, a financial wellness program may be integrated with the same online database that an employee already uses regularly to manage other employer benefits and programs. Ongoing by incorporating strategies that encourage regular participation and help employees build upon their financial wellness over time. For example, financial wellness programs may incorporate opportunities for participants to set goals and track them over time as a way of maintaining long-term engagement and consistent reminders of the services that the program offers. Dynamic by offering financial tools, relevant and timely communication of financial information, and two-way channels for employees to be able to access personalized information and expert advice. As opposed to merely providing static content on financial topics, financial wellness programs create opportunities for employees to interact with content and apply their financial knowledge to their own lives. For example, financial wellness programs may offer employees the opportunity to review their credit reports or consult with a financial advisor. Focused on risk assessment, anticipating and preventing financial emergencies, rather than responding exclusively to those that already exist. Financial wellness programs use risk assessment tools such as initial assessments, credit monitoring and tailored financial advice in order to increase participants’ financial security and financial resiliency when faced with a crisis. In doing so, employees are better equipped in the case that a financial emergency does arise, and may be able to do so with little impact on their job performance and/or absenteeism. Providing access to institutional mechanisms that promote positive financial behavior, such as access to bank accounts, goal-setting tools, responsible credit, and investment opportunities. Financial wellness programs may often serve as a bridge to traditional financial services, especially for underserved households, by eliminating barriers and providing the information and access that employees need in order to increase their financial capability. Improving employee’s access to quality financial services including credit and savings can reduce stress and overall financial stability by helping employees create safety nets and avoid more predatory, highcost services.
  12. 12. 12 | Em p l o y e r S t r a t egi e s fo r I mp ro vi n g Fi n an ci al Wellnes s Many other factors will also contribute to the success of a customized financial wellness program, including the relationship and trust between an employer and its workforce, the strength, capacity and reputation of the financial wellness program and its ability to meet the needs of a diverse workforce. The success of a financial wellness program will depend in part on its ability to provide appropriate, dynamic and accessible delivery channels, but also on the quality of content and delivery of individual program components, which may include: Financial education, counseling and planning across income levels. Traditional financial education often entails seminars and workshops, as well as one-on-one opportunities to work with a financial coach, credit counselor, or financial planner. Today, financial wellness programs may include these elements, with the major difference being that participants may have more opportunities to engage on their own terms. Seminars may be offered via pre-recorded webinars that participants can watch at their convenience, or financial coaches may be able to meet with them through email exchanges, virtual chats, and web-based meetings. Benefits and retirement counseling. While it is standard, and required, for employers to offer basic financial education associated with retirement plans, a financial wellness program may go beyond these requirements and include a more pro-active and targeted approach to delivering this type of financial education. Activities may include one-on-one personal budgeting to help employees begin to save for retirement or to help employees improve deferral rates. Web based tools including video chat and webinars can offer wholesale counseling to educate and advise the workforce on the voluntary and employer-sponsored benefits available to them—so that each employee can make informed benefit decisions throughout the year. Participants can receive recommendations for services that are most relevant to them. For example, after participating in a financial wellness assessment or quiz, a participant may be prompted to begin with financial coaching to work on a budget plan, or to speak with a financial planner about investment options, depending on his or her particular needs. In combination with appropriate products and services offered through a financial wellness program, effective financial education has been shown to improve consumers’ credit scores, increase savings rates and participation in 401(k) plans, and better prepare consumers for asset building opportunities such as homeownership.47, 48 Personal financial management tools (PFMs). PFMs are becoming increasingly prevalent as components of employers’ financial wellness programs. These online tools provide money management features, financial education, and personalized advice. Users can often link bank, credit card, investment, and other accounts to construct a realtime picture of their personal finances. They can use this information in order to make better financial decisions, track progress, and receive information and customized recommendations. Some PFMs offer incentives for positive savings behavior, and link to social networking sites in order to harness the power of social pressure to help individuals meet their financial goals. PFM providers are increasingly partnering with employers and workplace financial wellness programs in order to provide customized tools that align with an employee’s financial wellness objectives.
  13. 13. Employer Strategies for Improving Financial Wellness | 13 Credit report and identity theft monitoring. In 2012, the majority of American consumers reported that they did not review their credit score or credit report.49 Yet when this data is paired with financial education and credit building opportunities, it can be an important component of financial wellness, and building assets. Offering monitoring of credit scores and reports is another way that workplace-based financial wellness programs are merging quality education with timely and relevant financial products. Employees can receive a monthly credit report that reflects their credit standing, and provides insight into what actions they can take to improve it. Some employers also offer additional identity theft monitoring and protection products. Employer-based lending programs. Some employers recognize their workforce’s dependence on high interest payday and other predatory financial services, as well as the administrative costs of making internal payroll advances. In response, they may choose to partner with third party banks and credit unions to offer affordable short-term credit to employees to help alleviate financial stress, especially when unforeseen events may threaten an individual’s job security. Employer-based lending programs have the potential to be highly sustainable and streamlined by leveraging an employer’s existing infrastructure. These programs are appealing to employees, too, as they often combine online platforms, quick processing, and auto-deduction of payments from payroll, ultimately offering the ease and convenience that workers typically seek for short term borrowing. Furthermore, employer-based lending programs, which often involve partnership with a traditional financial institution, can leverage the reputation of a known lender, and help employees build relationships with local banks and credit unions.50 While workplace-based lending programs are often marketed as shortterm emergency products, they can also link with credit building, savings components, and other mechanisms that are designed to heighten employee engagement with multiple elements of the financial wellness program.
  14. 14. 14 | Ho w E m p l o y e r s B e n efi t fro m O fferi n g Fi n a nc ial Wellnes s Programs How Employers Benefit from Offering Financial Wellness Programs 72% felt less financially stressed after enrolling $348 in reduced operating costs per sick day, per employee $5,000 in employer savings from limiting personal financial distractions in the workplace With money-related issues being the leading cause of stress for Americans, equipping employees with tools and resources to increase their financial resiliency through financial wellness programs has the potential to reduce the financial challenges that often lead to stress. A recent study of participants in an employer based financial wellness study found that 72% of participants felt less financially stressed after enrolling in the program.51 In addition to increasing levels of financial knowledge through financial education strategies, the use of tangible tools and financial products in financial wellness programs can effectively respond to and prevent the events that cause financial stress in the lives of employees. Employers are recognizing the multiple benefits that accrue, to both their employees and to themselves, when they offer workplace-based financial wellness programs. Employees with greater financial wellbeing are healthier in general, as decreased financial stress helps to reduce the detrimental physical and mental health effects of stress.52 For employers, this can translate into reduced operating cost s – on average, $348 per sick day, per employee.53 In one instance, a large public company reported saving 21.57% on health care costs for heavy users of a workplace-based financial education program over the course of a year. This amounted to over $1 million in health care savings among all users of the program. The same company also reported a savings $837,230 through reduced absenteeism among users of the financial education program.54 Employees who reduce their financial stress also reduce workplace distractions and loss of productivity. Estimates of potential employer savings from limiting personal financial distractions in the workplace can be as high as $5,000- per employee, per year.55 Employees who are more focused at work perform better and are less likely to experience a workplace accident.
  15. 15. How Empl oy ers Benefi t from O fferi ng F I nanc i al Wel l nes s Progr am s | 15 Workplace financial wellness programs have also been shown to reduce employee requests for 401(k) loans, and to influence increased contributions to retirement savings.56 This in turn can help employers comply with fiduciary responsibilities of retirement packages, create a more desirable balance within a 401(k) portfolio, and attract talent by offering more generous retirement packages.57 Finally, offering financial wellness programs can help employers increase retention and employee commitment. Offering comprehensive benefits packages helps employers recruit talent and increase employee loyalty.58 Similarly, offering financial wellness programs can help employees mitigate financial crises and maintain job stability once they become engaged. In addition, employees who are able to increase their financial literacy and confidence about their current financial situation are more likely to be satisfied in their employment.59
  16. 16. 16 | Ho w E m p l o y e e s B e n efi t fro m FI n a n ci al Wellnes s Programs How Employees Benefit from Financial Wellness Programs As prevalent as financial stress is across different demographics and income levels, so is the desire to increase money management skills. According to a recent global study, 90% of consumers would like to improve their money management skills.60 A high quality financial wellness program can help employees increase their financial capability by offering opportunities to: 4 improve basic money management skills and financial decision making; savings 4 increaselong-termfor short-term expenses and emergencies, as well retirement plans and investments; 4 decrease stress and improve physical and mental health; 4 support job stability and satisfaction; 4 improve credit scores; and 4 decrease credit costs and debt burdens.
  17. 17. Potenti al O bs tac l es for Em ployer s | 17 Potential Obstacles for Employers Despite the benefits of offering financial wellness programs, employers may be wary of providing them to employees if they’re not guaranteed to cover the program’s expense through cost reductions and productivity gains. Costs to deliver a financial wellness program usually include initial set up fees and ongoing program administrative costs. However, these expenses can instead be viewed as an investment: research shows that the return on investment per employee for a financial wellness program is 3:1.61 This ROI does not include more long-term and indirect benefits, such as attracting higher-qualified employees, increased employee satisfaction, and greater participation in 401(k) plans. Employers may also be concerned that financial wellness programs will not generate enough employee participation to make them worthwhile or achieve the desired affects. In many cases, the most likely participants in a financial wellness program will be highly motivated employees, not necessarily those in most need of assistance. As a result, employers may choose to incorporate incentives to encourage participation, and develop a culture that accepts the reality that many do struggle to make ends meet. For example, a common incentive offered by employers to increase participation in general wellness programs is reduced health insurance premiums.64 This same approach could be translated to financial wellness programs as well. Furthermore, financial wellness programs often focus on building financial capability versus only financial education. Financial capability means pairing tangible financial resources, products and services with financial education to maximize the immediate and long-term impact on consumers through affecting behavior changes. For example, a financial wellness program may offer emergency loans that have the potential to meet immediate employee needs, and can also serve as a teaching tool and an opportunity to build assets such as credit or savings accounts. Financial wellness programs also leverage technology so that participants can have access to personalized information and tools 24:7, without being limited to only attending a scheduled workshop or coaching appointment.
  18. 18. 18 | Co n cl u si o n Conclusion There is a growing awareness of the important role financial wellbeing and strategic money management plays in the lives of employees, and the impact their wellbeing has on their employer’s success. In response, companies are increasingly adopting financial wellness strategies in order to create healthier, more stable workforce populations. Financial wellness programs succeed by offering a range of options, services, and innovative tools that employers can choose from to meet the specific needs of their respective workforce. Ultimately, financial wellness programs offer tremendous potential for an employer to improve the financial wellbeing of its employees while benefitting from a substantial return on investment. About the Research This paper was conceived and developed through an innovative collaboration with Emerge Financial Wellness. ING Employee Benefits commissioned Emerge to assist in the development of this report. For more information about Emerge, visit www.emergebenefit.com. emerge financial wellness Dr. Michal Grinstein-Weiss, Reviewer and Advisor Dr. Michal Grinstein-Weiss is the associate director of the Center for Social Development at Washington University in St. Louis. Grinstein-Weiss is a nationally and internationally recognized expert in the field of asset building, and her research focuses on developing programs and policies to promote economic and social development of vulnerable groups. Currently, Grinstein-Weiss is collaborating on ground-breaking studies that examine innovative ways to increase savings and to promote financial security of American households. Carmina Lass, Lead Writer/Independent Researcher Carmina Lass is an independent writer, researcher and consultant. She primarily works with nonprofit organizations that improve the financial condition of working Americans. Her research is focused on designing and implementing innovative financial literacy curricula, as well as online educational tool development. Lass formerly managed the financial education programs at Innovative Changes, a nonprofit based in Portland, OR.
  19. 19. E nd Not es | 19 1 2 3 Brobeck, S. (2008). Understanding the Emergency Savings Needs of Low- and ModerateIncome Households: A Survey-Based Analysis of Impacts, Causes and Remedies. Consumer Federation of America Manuscript. Forsyth, J. (2012, September 19) More than two-thirds in U.S. live paycheck to paycheck: survey. Reuters. Retrieved from: http://www.reuters.com/article/2012/09/19/us-usasurvey-paycheck-idUSBRE88I1BE20120919. Brooks, J. & Wiedrick, K. (2013, January). Assets and Opportunity Scorecard. Living on the Edge: Financial Insecurity and Policies to Rebuild Prosperity in America. Center for Enterprise Development. Retrieved from: http://assetsandopportunity.org/scorecard/ about/main_findings/ 31 PricewaterhouseCoopers. (2012), op.cit. 32 Sammer, J. (2012). Financial Education--Stress = Improved Productivity. HR Magazine, 57(6), 71. 33 Brun et. Al (2006)Assessing the Costs of Work Stress. Retrieved from: http://www.cgsst.com/stock/eng/doc272-806.pdf 34 Supra note 38, P. 26 Financial Literacy Partners, LLC., op.cit. 35 Wright, Thomas and Douglas Bonett. Job Satisfaction and Psychological Well-being as Non-additive Predictors of Workplace Turnover. Journal of Management 2007 33: 141-160 36 Mueller, A. (2011, July 25). The cost of hiring a new employee. Investopedia. Retrieved from: http://www.investopedia.com/financial-edge/0711/the-cost-of-hiring-a-newemployee.aspx#axzz2BN3wABlL/ 37 Employee Benefit Research Institute. (2011, December). 401(K) Plan Asset Allocation, Account Balances, and Loan Activity in 2010. Issue Brief No. 366 Retrieved from: http://www.ebri.org/publications 38 EBRI (2011), op.cit. 39 Edmiston, K., Gillett-Fisher, M., & McGrath, M. (2009, October). Weighing the Effects of Financial Education in the Workplace. The Federal Reserve Bank of Kansas City Community Affairs Department. 4 The 2012 Consumer Financial Literacy Survey. (2012) The National Foundation for Credit Counseling and The Network Branded Prepaid Card Association. Retrieved from: www.nfcc.org./ 5 ibid. 6 Lusardi, A. S. (2007). Financial Literacy and Retirement Preparedness: Evidence and Implications for Financial Education. Business Economics, 42(1), 35. 7 The Pew Charitable Trusts. (2012, July). Payday Lending in America: Who borrows, Where they borrow and why. Retrieved from: http://www.pewstates.org/uploadedFiles/PCS_Assets/ 2012/Pew_Payday_Lending_Report.pdf 8 Saunders, L., Plunkett, L. & Carter, C. (2010, June). Stopping the Payday Loan Trap: Alternatives that Work, Ones that Don’t. National Consumer Law Center. 40 9 Center for Responsible Lending. (2012). Payday Lending: How a short-term loan becomes long-term debt. Retrieved from http://www.responsiblelending.org/payday-lending/. Joo, S. (2000). Improving Employee Productivity: The Role of Financial Counseling and Education. Journal Of Employment Counseling, 37(1), 13. 41 Robison, J. (2010) The business case for wellbeing. Gallup Business Journal. Retrieved from: http://businessjournal.gallup.com/content/139373/Business-Case-Wellbeing.aspx/ 42 Rath, T., & Harter, J. (2010). Wellbeing: The Five Essential Elements (Kindle Locations 1278-1284). Gallup Press. Kindle Edition. 43 Rath, T., & Harter, J., op.cit. 44 Rath, T., & Harter, J., op.cit. 45 Joo, S. (2000). op.cit. 46 Loibi, C., & Hira, T. K. (2005). Self-directed Financial Learning and Financial Satisfaction. Journal Of Financial Counseling & Planning,16(1), 11-21. 10 Saunders, L., Plunkett, L. & Carter, C., op.cit. 11 ibid. 12 Federal Deposit Insurance Corporation. (2012). 2011 FDIC National Survey of Unbanked and Underbanked Households. Retrieved from: http://www.fdic.gov/householdsurvey/ 13 14 Brooks, J. & Wiedrick, K., op.cit. Bricker, J., Kennickell, A., Moore, K., & Sabelhaus, J. (2012) Changes in U.S. Family Finances from 2007 to 2010: Evidence from the Survey of Consumer Finances. Federal Reserve Bulletin, Vol. 98, No. 2. 15 Brooks, J. & Wiedrick, K., op.cit. 47 16 Shapiro, G. K., & Burchell, B. J. (2012). Measuring Financial Anxiety. Journal Of Neuroscience, Psychology, & Economics, 5(2), 92-103. Malouf, M. (2012). A Global View of the Benefits of Employee Financial Wellness. Employee Benefit Plan Review,66(11), 15. 48 Curley, J., Ssewamala, F., & Sherraden, M. (2009). op.cit. 17 Brooks, J. & Wiedrick, K., op.cit. 49 The 2012 Consumer Financial Literacy Survey. (2012) op.cit. 18 PricewaterhouseCoopers. (2012) Employee Financial Wellness Survey: 2012 Results. Retrieved from: http://www.pwc.com/en_US/us/private-company-services/ publications/ assets/pwc-financial-wellness-survey.pdf 50 Jacob, K. (2005, August). Meeting Them Where They Work: The Promise of Financial Services Distribution in the Workplace. The Center for Financial Services Innovation. 19 Helman, R., Copeland, C., & VanDerhei, J. (2012). 2012 Retirement Confidence Survey: Job Insecurity, Debt Weigh on Retirement Confidence, Savings. EBRI Issue Brief, no. 369, March 2012. 51 Emerge Financial Wellness. (2013, February 5). Update: Program Success and Employee Satisfaction. 52 Prawitz, A.D., & Garman, E.T. (2009, April), It’s time to create a financially literate workforce to improve the bottom line. Benefits Compensation Digest, Volume 46, Number 4, pages 1, 11-14. 53 Robison, J., op. cit. 54 Financial Finesse. (2011, December 6). Case Study: Impact of Employee Financial Stress on Healthcare Costs. Retrieved from: http://www.financialfinesse.com/research-bestpractices/case-study-in-financial-wellness-the-impact-of-employee-financial-stress-onhealth-care-costs/#more-3795 55 Kadlec, D. (2012, July 19) Proof that workplace financial education works. TIME Magazine online. Retrieved from: http://business.time.com/2012/07/19/new-evidencesays-workplace-financial-education-effective/ 20 ibid. 21 Curley, J., Ssewamala, F., & Sherraden, M. (2009). Institutions and Savings in LowIncome Households. Journal Of Sociology And Social Welfare, 36(3), 9-32. 22 American Psychological Association. (2012, January 11). Stress in America: Our health at risk. Retrieved from: http://www.apa.org/news/press/releases/stress/2011/final-2011.pdf 23 Garman, T., et. al. (2005, March 23). Financial Distress Among American Workers Final Report: 30 Million Workers in America—One in Four—Are Seriously Financially Distressed and Dissatisfied Causing Negative Impacts on Individuals, Families, and Employers. Personal Finance Employee Education Foundation. Retrieved from: http://www.personalfinancefoundation.org/features/Financial-Distress-AmongAmerican-Workers-Final-Report-full.html/ 56 Financial Literacy Partners, LLC. , op.cit. 24 ibid. 57 Krueger, P., & Chang, V. (2008). Being poor and coping with stress: health behaviors and the risk of death. American Journal Of Public Health, 98(5), 889-896.. Edmiston, K., et. al. op.cit. 25 58 EBRI, op. cit. 59 Hira, T. K., & Loibl, C. (2005). Understanding the Impact of Employer-Provided Financial Education on Workplace Satisfaction. Journal Of Consumer Affairs, 39(1), 173-194. 60 Metlife (2011), op. cit. 26 Schulz, A. J., Mentz, G., Lachance, L., Johnson, J., Gaines, C., & Israel, B. A. (2012). Associations Between Socioeconomic Status and Allostatic Load: Effects of Neighborhood Poverty and Tests of Mediating Pathways. American Journal Of Public Health, 102(9), 1706-1714 27 Thoits, P.A. (2010). Stress and Health: Major Findings and Policy Implications. Journal of Health and Social Behavior, 51, (1), 41-53. 28 MetLife. (2011). The Metlife Study of Financial Wellness Across the Glove: A look at how multinational companies are helping employees better manage their personal finances. Boston College Center for Work and Families. 29 PricewaterhouseCoopers, op. cit. 30 Personal Finance Employee Education Foundation. (2009, May 28). Financial Distress Taking Toll on Employee Health [Press Release]. Retrieved from http://www.personalfinancefoundation.org./ 61 Prawitz, A. & Garman, E.T., (2009). op. cit. 62 Wojcik, J. (2007). Financial incentives boost wellness program participation. Business Insurance, 41(49), 28.
  20. 20. About ING U.S. ING U.S. (NYSE: VOYA), which plans to rebrand in the future as Voya Financial, is a premier retirement, investment and insurance company serving the financial needs of approximately 13 million individual and institutional customers in the United States. The company's vision is to be America's Retirement Company, and its guiding principle is centered on solving the most daunting financial challenge facing Americans today – retirement readiness. Working directly with clients and through a broad group of financial intermediaries, independent producers, affiliated advisors and dedicated sales specialists, ING U.S. provides a comprehensive portfolio of asset accumulation, asset protection and asset distribution products and services. With a dedicated workforce of approximately 7,000 employees, ING U.S. is grounded in a clear mission to make a secure financial future possible -- one person, one family and one institution at a time. ING U.S.’s Insurance Solutions business, which comprises its Retail Life and Employee Benefits segments, is a leading provider of life insurance and medical stop loss in the U.S. The Retail Life business is focused on wealth protection and transfer opportunities to meet the needs of a broad range of customers from the middle-market through affluent market segments. The Employee Benefits segment provides stop loss, group life, voluntary and disability products to mid-sized and large businesses and has more than 90 years of experience in the design, implementation and administration of employee benefits plans. 167894 09/17/2013

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